Tilburg, July 14th, 2019
Slowly but surely the awareness is arriving in our sector that a possible recovery of the recovered paper market is not imminent. Some still talk about after the holidays or at the end of the year. We are keeping hopes alive. But if no dramatic changes will occur in the world like China importing again or a world economy that will grow by 5%, we will have to brace for a longer period of depression of the recovered paper market. That is not automatically bad news for us in Europe. In several countries in Europe we live in an environment where landfilling recyclables is out of the question and where it is allowed costs to do so are very high. Especially in comparison with the U.S., not to speak about other countries in the world. In the old days we used to moan that the ban on landfilling of recovered paper was disturbing the market as it kept on coming, so how could you get a new balance in offer and demand ? In the global market that exists also for recovered paper we have to deal with competitors that have advantages like low landfill costs and absence of any environmental legislation and no restrictions on export. But that come also with disadvantages. Lower landfill costs and no ban on landfill would reduce generated volumes quickly and substantially. Volumes on which the recovered paper sector is thriving in modern times. With a ban on landfill and high costs every kilo is still collected and we are able to offer it cheaper than competitors as our sources will be obliged to keep on paying us for collection and processing. Whereas landfill or incineration costs in practice are easily € 150 per ton, that in theory at least will be the compensation we could ask for. Or even more, as landfill is not allowed anyway. A peace of mind when (price) competition is increasing. If it will go that way is pretty obvious. We hear from Southern Europe of increasing imports of recovered paper from the U.S. Traditionally mills over there have more experience with import and processing of these grades, so the focus of our American counterparts lies there. This import is only possible because our local prices are higher than in the U.S. It is therefore clear that our prices will have to come down. How much ? Hmm, that is difficult to say. At this very moment it even seems that the price of occ has bottomed out. Buyers like vultures (excusez le mot) who only offered us $ 70 per ton for kls (occ) delivered to far destinations have understood in the meantime they are not going to get it. Not yet anyway. The effect of lower generation, the unwillingness of merchants to sell cheaply and the obvious still available storing space have avoided that. But it is not going to stay that way. In September generation will increase again, China will be taking ever less and recovered paper that has been bought today in the US will arrive in Europe by then. And we will also bring ourselves more onto the market due to increased stocks and lack of space. An unrealistic horror scenario ? Let’s hope so.
Imports of recovered paper into China ,mounted to 5.517.000 tons in the first 4 months of 2019. This was 1.871.000 tons less than in the same period of 2018. Import licenses were issued for 8.267.000 tons till the end of May, so 2.656.298 tons less than in the same period of 2018. Reduced imports were compensated to a lesser extend by more imports of recycled pulp (+71.000 tons), but surprisingly imports of pulp were reduced by 493.460 tons in the first 4 months of 2019. In total imports of raw material for the paper and board industry went down by 2.293.000 tons in the period 1.1 – 30.4.2019, of which 493.460 tons of pulp for which no import license is needed. It shows that the (limited) import licenses for recovered paper are not the (only) problem for the paper and board industry.
In 2018 imported volumes of recovered paper in China went down 33.8% compared to 2017. In 2017 and 2016 also imported volumes went lower already compared to previous years with 9.8% and 2.7% respectively. The drop in 2018 could have been much worse if imports in the last Quarter would not have been increased by 34% compared to the same period of 2017. This was probably due to the active use of the yet available import licenses. And, the average price of imported recovered paper went up by $ 20 per ton compared to 2017. Next to mixed paper, that was not imported at all anymore, imports of all other grades dropped as well, like corrugated and kraft grades -14%, deinking grades -31% and high grades -17.1%. Furthermore it worked out that only Japan and other Asian countries last year exported more volumes to China, +9.8% = 244.000 tons and + 39.6% = 520.000 tons respectively. Against that, imports from the U.S.A. (-45.5%) and Europe (-38.1%) went down significantly. Imports from all other regions went down as well.
Price indications in Europe for low grades of recovered paper, sorted, baled and ex-works are now between € 20 and € 150 per ton. These prices are depending on quality, available volume, region and loaded weight.
Click here for the price chart, with prices of the last 10 years.
The price chart gives an indication of the price of mixed paper in the Netherlands free delivered mill over the last years. Scrolling over the top of the colums gives the exact price indication in Euro's per ton.
To view the price chart completely, please click and hold on the price chart after opening and move cursor to left or right to see all available years/months.